Competition and stability in banking
Banking went from being one of the most regulated sectors in the economy after the crisis in the 1930s to a more lightly regulated sector with the liberalization process that started in the 1970s in the United States. The previous period was marked by few crises with much more instability in the second culminating in the 2007 subprime crisis. In the first period competition was considered detrimental to stability and in many countries competition policy was not applied fully to this sector until recently despite its importance within the economy and the costs and inefficiencies induced by financial repression. Indeed central banks and regulators were often complacent about collusion among banks preferring to deal with a concentrated sector characterized by soft rivalry.